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June 28, 2005

Economic and Military Competition

Not only Unocal, but also Maytag and IBM have been targeted for takeover by Chinese interests. This reminder comes from Dr. Michael A. Weinstein in the latest issue of the Power and Interest News Report (PINR).

Following the acquisition in May of IBM's personal computer business by China's Lenovo Group, the bid for Maytag by Haier America Trading -- the U.S. arm of appliance giant Haier -- and the move to acquire Unocal by China National Offshore Oil Company (C.N.O.O.C.) mark a new stage in Beijing's export driven strategy of economic development that is geared to make China an "all-round" great power with state-of-the-art industries in all strategic sectors over the next 20 years.

The test of the JL-2 [intercontinental] missile, which has a 6,000 mile range, advances toward Beijing's aim of enhancing China's military capabilities in order to make the country the dominant power in East and Southeast Asia, gradually eroding U.S. influence.

Both the economic and military moves show that Beijing's geostrategy is firmly in place and that the Chinese political class is confident that the strategy is working.

It's clear that China is fully geared up for international competition, both economic and military.

The acquisition of foreign businesses has the added strategic advantage of creating interest groups in the countries in which those businesses are based that are economically dependent on China and, therefore, would tend to be favorable to its interests in political conflicts.

As we wrote two days ago, "Instead of admitting that we have a [global energy] problem and working together to find an answer, Washington and Beijing both pretend that business as usual is the only option."

The bid for Unocal signals that Beijing is aware that it must act quickly to guarantee its resource supplies, at the expense of competitors, especially the U.S. As part of Beijing's overall strategy, Chinese enterprises have recently purchased mines in Australia and Canada, and Beijing has pursued trade deals geared to natural resources in South America. Unocal is part of that larger picture.

Perhaps being overly optimistic (some might say naive), we wrote, "Will the nations of the world continue to compete for non-renewable and dwindling energy sources? Or can they learn to cooperate in developing sustainable, clean, responsible energy solutions?"

Competition appears to be the name of the game for the foreseeable future. If it takes the form of an all-out arms race between China and the U.S., the consequences could be disastrous.

And even if these mega-nations choose to compete solely in economic spheres, the larger question of long-term sustainability still has not been addressed. That will require international cooperation -- on a nearly unprecedented scale -- but it may be our only hope for a safe, responsible, and livable future.